Ado Annie D'Ysquith said: "Wait, the "central action" is a peer pressured virgin sacrifice? When does that happen in the show? Lord, the things that go over my head...
"
What do you think it means when Sandy sings "Goodbye to Sandra Dee"? Remember that the first time we hear a reference to Dee is in Act I: "Look at me, I'm Sandra Dee/ Lousy with virginity".
Then add the transformation that Sandy effects (with the help of Frenchy): she goes from virginal pink and white to Leather Goddess. She starts to smoke and swear. She "rats" her hair. "Tell me about it, Stud" is not the cry of devoted virgin.
And why does she do so? Because (in the film and TV version) she finds herself shunned by the group during the race. (It's been a couple of decades since I saw the stage show and I forget how they handle the moment there.)
And because she is convinced by Rizzo's argument:
"There are worse things I could do
Than go with a boy or two
Press against them when we dance
Make them think they have a chance,
Then refuse to see it through.
That's a thing I'd never do."
And later:
"I don't steal and I don't lie..."
Rizzo's argument is "I may be a slut, but at least I'm honest and not a tease."
Sandy learns her lesson.